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Lubos Motl, a bright young Czech physicist with a winning way with those he considers idiots*, has decided to cogitate on fiat money and the US`s screwed up monetary system, and proposes to peg the dollar to the Dow:

You might think that I am going to defend the gold standard or something of this sort. Well, you are not infinitely far from the truth. But gold is obsolete, arbitrary, and dangerous. Someone can find a lot of gold in the future and we don’t want the world’s economy die at that moment. Gold doesn’t represent the overall economy – what people actually want to pay for – well. And if you think that all the commodities have fixed price ratios and only the “money” is fluctuating, note that the gold/silver price ratio has been oscillating frantically, by orders of magnitude in both directions. Pretty much everything can oscillate and does oscillate.

The gold standard brings some advantages but now we have a more comprehensive framework to adjust the advantages: we want to suppress the most unstable and harmful degrees of freedom by redefining the money. There is one more general advantage of the gold: you know what you own. With money, you own pieces of paper whose value can be manipulated by arbitrary decisions of the government. And an uncertainty about the value of things – their ill-definedness – is creating havoc. The only reason why prices expressed in the fiat money don’t fluctuate wildly is that the other sellers don’t know any definition of the money, either. 😉 So we want to peg the money to something more well-defined: to redefine them. What is it? It’s the stocks.

I think Motl is hopelessly self-deceived on his proposal, but it`s one made in good faith and presents an opportunity to educate Motl and his audience on Austrian views of money, government and markets. Any takers?

The essay stirred a few thoughts by yours truly, including the following which I posted in the comment thread:

Jeff, you’re right that money does not taint everything, and that monetarily compensated work as well as “volunteer” work is itself a font of benefit for others, as well as self-benefit. I agree that we should never lose sight of that.

However, Christ called us not merely to work and make our own daily bread in an increasingly impersonal world, but strive to be members in a community of loving and caring people. Some of us may get this at the office, but very many don’t – and may not be fully a member of any mutually caring community at all.

Money is an instrument of exchange that has played a vital role in an amazing expansion of wealth that began before Christ and greatly improved material human welfare. But it cannot be denied that this has also been accomanied by a scaling up of human enterprises that have also served to loosen the bonds of individuals with each other, and left us with a thirst for community that is rarely slaked.

Somewhat ironically, it is this need for community in “civilized” man that in fact served as the impetus for the growth of organized religion, which religion served to provide not only the community needed by individuals but also to served to strengthen the bonds of otherwise unconnected people in expanding societies.

The social glue provided by organized religion has of course had various legacies, not least of which have been deliberate manipulation by elites for selfish purposes and clashes with societies for which a different religion provides the social glue (both phenonmena apparent in the recent war against ragheads).

The glue of organized religion is also rather weak, and a very imperfect substitute for the closer and more caring communities of the type the Jesus called for. Hence we see not only the continuing creation of sects and reformist movements, but also our own attraction to the continuing calls from religious groups and other community leaders for us to form tighter communities to which we directly and personally contribute.

So, is money the root of all evil? No. Does it by itself taint everything? No. But is it an instrument of alienation? Inevitably, yes – and one that religion provides one avenue for us to partly heal.